Posted on: Mar 03, '08
5 Easy Steps to Save Money
Investment and Saving
I still remember those days when I used to earn just two thousand per month and still saved at least 300-400 every month. Now after 6 years I earn 15 times more than that and still saving about 30% of my regular income. Thanks to the wonderful books and articles that I read when I was young and I implemented them in my life at a very young age.
Everyone wants to save money and invest at the right time and at a right place but it is not as easy as it looks to be. After all it is just about having your basics in place.
Saving Money is a 5 step easy process :-
1. Goal setting - The first and foremost step in saving money is to set up a goal for youself. One of the challenges that everyone faces today is to save money consistently every month. The first step in saving money starts with proper planning or Goal setting. To do this you have to decide first on how much money do you intend to save every month. It just cannot be a ball park figure but it has to be a specific figure/amount that you wish to save. You have to set goals for yourself right in the beginning. For example
some people say that they want to become rich in the next 5 years.
Now this is not the right approach because you are not commiting a figure to yourself. Until unless you specify a figure that you want to save it would be hard for you to meet your goals at the end of the day/month/year.
2. Implementing - The second step is to implement your plan that you've made. The best way to do this is to keep aside a figure whenever you get some money from any source.Suppose you are salaried then you can create a separate account to do this. I still follow these simple, smart and easy steps to do this.
a. Create a separate savings account in any bank.
b. Make a standing instruction from the salaried account to transfer some funds to the separate account for savings. Most of the banks have this online facility so this is really easy.
c. Sign-up for e-statements so that you can keep a track of your monthly savings of the separate account that you've opened for savings purpose.
3. Tracking - This is the toughest part of money saving. There are various ways to do this but I follow a very simple and easy procedure in order to do this. I prefer to pay all my utility bills, shopping bills, insurance premiums, credit card bills etc. by my debit card which has online banking facility. By this, I can logon to internet and pay all my bills by a single click. At the end of the month I can track my expenses. If I pay anything by cash then I write it down in my excel spreadsheet that I've created especially for this
purpose. Let me know if anyone is interested in getting that template from me.
4. Reviewing - After you've planned, implemented and tracked your expenses now is the time to review where is that you are making most
of your expenses. It can be credit cards, shopping, phone bill, car maintenance, personal loan payments etc. Now you need to sit down with
yourself and see how can you reduce these expenses. Reducing your credit card/phone/personal loan payments is not difficult and is a different topic altogether and I will discuss that in a separate blog so that we do not divert from this topic. But if it is anything apart from these things then it is either your shopping or something else that is
giving you trouble.
5. Investing - Saving money not only goes with just saving your cash money but also using this money to create more money. You can do this by several ways. One of the ways you can do this is by getting a life insurance/medical insurance which will save your taxes, increase your risk cover and also will create a new source of income in the future for you. Investing altogether is a very broad concept and it typically depends on the individual where and how he wants to invest his savings which again depends on how much risk he/she wants to take.
Tags: money saving, investment, money, saving, taxes
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